HSBC has raised its rating on TE Connectivity (TEL, Financial) from Hold to Buy, adjusting the price target upwards to $175 from the previous $166. This decision follows TE Connectivity's fiscal second-quarter results, which surpassed market expectations.
The financial institution attributes the upgrade to the company's attractive valuation and notable growth prospects. Additionally, HSBC highlights TE Connectivity's expanding involvement in the artificial intelligence sector, alongside its minimal exposure to tariff risks, as key factors underpinning this positive outlook.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for TE Connectivity PLC (TEL, Financial) is $164.32 with a high estimate of $190.00 and a low estimate of $130.00. The average target implies an upside of 20.77% from the current price of $136.06. More detailed estimate data can be found on the TE Connectivity PLC (TEL) Forecast page.
Based on the consensus recommendation from 21 brokerage firms, TE Connectivity PLC's (TEL, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for TE Connectivity PLC (TEL, Financial) in one year is $152.47, suggesting a upside of 12.06% from the current price of $136.06. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the TE Connectivity PLC (TEL) Summary page.
TEL Key Business Developments
Release Date: April 23, 2025
- Revenue: $4.1 billion, up 5% organically and 4% on a reported basis year over year.
- Adjusted Earnings Per Share (EPS): $2.10, up 13% versus the prior year.
- Adjusted Operating Margin: 19.4%, up 90 basis points year over year.
- Orders: $4.25 billion, up 6% year over year and sequentially.
- Free Cash Flow: $1.1 billion in the first half of the fiscal year.
- Dividend Increase: 9% increase announced.
- Industrial Segment Growth: 17% growth, driven by digital data networks and AI applications.
- Transportation Segment Margin: Adjusted operating margins above 20%.
- Richards Acquisition: $2.3 billion deployed for acquisition in the industrial segment.
- Third Quarter Sales Guidance: Expected to increase to $4.3 billion, up 5% organically year over year.
- Third Quarter Adjusted EPS Guidance: Expected to be around $2.06, up 8% year over year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TE Connectivity PLC (TEL, Financial) reported second-quarter sales of $4.1 billion, exceeding guidance and reflecting a 5% organic growth year over year.
- The company achieved record adjusted earnings per share of $2.10, surpassing guidance and marking a 13% increase from the previous year.
- Adjusted operating margins improved to 19.4%, up 90 basis points year over year, driven by strong operational performance.
- The industrial solutions segment experienced double-digit growth, with a notable 17% increase, driven by digital data networks and AI applications.
- TE Connectivity PLC (TEL) demonstrated strong cash generation, with $1.1 billion in free cash flow in the first half of the year and a 9% dividend increase announced.
Negative Points
- The company faces challenges from recent tariff announcements, particularly impacting the industrial segment more than the transportation segment.
- Global auto production is expected to decline, with a 5% year-over-year decrease anticipated, affecting the transportation segment.
- The commercial transportation business experienced a 5% organic decline due to market weakness in Europe and North America.
- The medical business saw a 14% decline in sales due to inventory normalization by customers, although sequential growth was noted.
- The adjusted effective tax rate is expected to increase, resulting in a $0.06 sequential headwind to EPS in the third quarter.
